Cash for Questions Again

What we are concerned with here is the scandal involving Mohamed Al-Fayed, the owner of the House of Fraser department store group, the lobbying firm Ian Greer Associates, and a number of Members of Parliament, most notable amongst whom were Tim Smith and Neil Hamilton. The specific allegation being that said Members of Parliament had been willing to ask questions in Parliament on behalf of Mr Al-Fayed in return for cash payments. This story first appeared in The Guardian on the 20th October 1994, (some four months after The Sunday Times had published the details of its original 'Cash for Questions' investigation involving the MPs David Tredinnick and Graham Riddick), later receiving further publicity when the Channel 4Dispatches documentary series broadcast its 'Cash for Questions' programme on the 21st January 1997. The roots of the scandal however lay some in the events some years previous to these revelations.

2. Tiny Rowland and Mohamed Al-Fayed

Back in the mid 1980s the German born, but naturalised British businessman Roland Rowland, generally known as 'Tiny Rowland', ran Lonrho PLC, at the time a fashionable conglomerate. For many years Rowland had been seeking to acquire control of the House of Fraser, a company which operated a number of department stores in the United Kingdom, most notably its flagship store of Harrods in Knightsbridge, London. But despite building up a stake of almost 30% in the company Rowland had been prevented from so doing by a combination of determined resistance from the House of Fraser board and opposition from the government, who disapproved of Lonrho because of a number of allegedly unscrupulous business transactions conducted in Africa. (Which at one time famously led Edward Heath to brand Lonrho as "the unacceptable face of capitalism".)

In January 1985 Rowland sold Lonrho's stake in the House of Fraser for £138 million to an Egyptian businessman of his acquaintance named Mohamed Al-Fayed. He did so in the belief that he and Al-Fayed had an understanding, and that Al-Fayed would warehouse the shareholding until such time as he was free to launch another takeover bid for the company. However on the 11th March 1985, a mere ten weeks after acquiring the shares, Al-Fayed launched his own £615 million bid for the company which was welcomed by the House of Fraser board and was thus successful.

Mr Rowland was naturally unhappy at this turn of events, and since he owned The Observer Sunday newspaper Rowland was able to use this paper as a platform to air his grievances, whilst he could also count on the assistance of Edward Du Cann who, as well as being a director of Lonrho was also a senior Conservative Member of Parliament. Rowland called on the government to launch an enquiry into the acquisition of the House of Fraser by Al-Fayed, believing in particular that Al-Fayed didn't have the money to finance such a bid and therefore suspected that Al-Fayed could only have done so by fraudulent means. The resulting feud between Rowland and Al-Fayed was to run for a number of years.

3. The Lobbying Campaign

It was in the context of this feud that Mohamed Al-Fayed undertook his own parliamentary lobbying campaign, with the objective of ensuring that he was allowed to keep control of the House of Fraser, specifically by persuading the government that no inquiry into the takeover was justified.

In November 1985 Mohamed Al-Fayed made contact with the lobbying firm Ian Greer Associates (IGA) which engaged a number of members of parliament including Tim Smith, Neil Hamilton, Michael Gryllis, Andrew Bowden and Peter Horden (who later became collectively known as the 'Members for Harrods') to seek to promote the cause of Al-Fayed and denigrate that of Rowland. Smith went so far as to obtain an adjournment debate in July 1986 in which he denounced Rowland (for which he later admitted receiving £10,000 from Al-Fayed). Hamilton didn't enter the picture until the summer of 1987, when he too asked a string of questions, and put down an early day motion condemning the DTI enquiry.

4. The DTI enquiry

As it happens Al-Fayed's lobbying activity failed to have the desired effect as in April 1987, Paul Channon, Secretary of State for Trade and Industry, decided he would hold for an inquiry into the Fayed takeover of the House of Fraser, and appointed two independent inspectors to consider the matter.

This report was completed in 1988, and its conclusions so alarmed David Young, Lord Young who had now taken over as the Secretary of State for Trade and Industry, that he referred the matter to the Serious Fraud Office for their consideration. Thus it wasn't until the 7th March 1990, that the report was officially published, although by that time most people had a good idea of what was in the report as
Tiny Rowland had got hold of a copy and had released some of the choicer excerpts in a special midweek edition of The Observer in March 1989.

DTI inspectors concluded, amongst other things, that the name Al-Fayed was bogus, and that the money which had been used to buy the House of Fraser had almost certainly been taken from the Sultan of Brunei without his consent. It was also fairly damning as far as the characters of both Mohamed Al-Fayed and his brother was concerned. According to the inspectors "They repeatedly lied to us about their family background, their early business life and their wealth". The inspectors also concluded that the "evidence that they were telling lies to us was quite overwhelming" and were "reluctant to believe anything they told us unless it was reliably corroborated by independent evidence of a dependable nature".

Although no action was ever taken to force Al-Fayed to dispose of his shares in the House of Fraser, successive governments took note of the conclusions of the DTI inquiry and declined to provide Al-Fayed with the British passport that he so desired.

5. You need to rent an MP just like you rent a London taxi

Naturally Al-Fayed was very unhappy with the conclusions of the DTI report and went to the European Court of Human Rights claiming that the DTI investigation had infringed his human rights. The wheels of justice move particularly slowly where the European Court was concerned, and it was not until September 1994 that the court finally ruled against Al-Fayed and dismissed his claim. By this time Neil Hamilton was a minister at the Department of Trade and Industry, where he was somewhat ironically given responsibility for business probity, whilst Tim Smith had become a junior Northern Ireland minister.

Having apparently spent the past fifteen months or so talking to Peter Preston, editor of The Guardian newspaper, dropping various hints about his activities back in the period 1985-1987, Fayed now decided to spill the beans, stating that "I felt it was now my public duty to make these facts known." On the 20th October 1994 The Guardian published details of Al-Fayed's allegations under the headline, 'Tory MPs were paid to plant questions says Harrods chief'. According to this version of the story Al-Fayed paid Ian Greer Associates a £50,000 fee to conduct a parliamentary lobbying campaign and to act as the conduit for the making of further cash payments to two MPs which he named as Tim Smith and Neil Hamilton.

Al-Fayed claimed to have been shocked by the knowledge that British MPs could be bought, and that Greer had told him "You need to rent an MP just like you rent a London taxi" (a statement which Ian Greer denies ever making), but was nevertheless prepared to pay the apparent going rate of £2,000 per parliamentary question. Smith immediately resigned and admitted that he had indeed received money, but crucially claimed that these payments had been made by Al-Fayed himself rather than IGA. Hamilton denied everything, and both he and Ian Greer immediately issued libel writs in the High Court against The Guardian to clear their names.

Most strange of all was the revelation that the Prime Minister John Major already knew of these allegations, having spoken to Al-Fayed three weeks previously in a meeting arranged by Brian Hitchen, editor of the Sunday Express. Major stated that he declined to "come to any arrangement" and that copies of the minutes of the meeting had been sent to the Director of Public Prosecutions. (The clear implication being that Al-Fayed was seeking some kind of quid pro quo for keeping his mouth shut. The DPP decided that was insufficient evidence and no charges were ever brought.)

Hamilton continued to deny all wrongdoing and clung on to office until the 25th October when he was sacked by Major, on the same day as the Prime Minister announced the establishment of the Nolan Committee (later known as the Committee on Standards in Public Life) which was given the remit of establishing some new rules to govern the future conduct of Members of Parliament, without actually concerning itself with what might or might not have been going on in the past.

In the meantime both Hamilton and Greer's libel cases had collapsed
in September 1994 in somewhat confusing circumstances, with both Greer and Hamilton blaming each other for the failure of their cases. Thus encouraged Al-Fayed wrote to the chairman of the Members' Interests Committee in December 1994, and alleged that he had personally made cash payments to Hamilton as well as Smith. The Member's interest committee however declined to condemn Hamilton, believing that there was insufficient evidence of any wrongdoing.

6. The Downey Report

Having been established in 1994 the Nolan Committee produced its first report in May 1995 which recommended a number of changes (known collectively as the Nolan reforms) which were adopted in November 1995.
Included in these reforms was the creation of a new post of Parliamentary Commissioner for Standards, the first such commissioner being being Gordon Downey, appointed on the 15th November 1995.

The broadcast of the Channel 4 Dispatches programme "Cash for Questions" on the 21st January 1997 re-opened the whole can of worms that many thought had been firmly closed in 1994. As it happened, Gordon Downey had been required on the 28th October 1996 to conduct an investigation into a series of complaints made by Al-Fayed, which turned out to be a complicated affair since it involved a detailed and somewhat tedious examination of the various commission payments made to members of parliament by Ian Greer Associates. The final Downey Report which appeared in July 1997 placed a great deal of reliance on the testimony which had emerged in September 1996 by three of Fayed's employees that supported their paymaster's story that Neil Hamilton had been in receipt of the odd fat brown envelope and decided that "the evidence that Hamilton received cash payments from Fayed in return for lobbying services is compelling; and so I conclude".

In Hamilton's case the publication of the Downey Report and its damning conclusion elevated him to the status of number one sleaze merchant and prompted the former BBC journalist Martin Bell to stand against him in his Tatton constituency as an independent anti-sleaze candidate. Both Labour and the Liberal Democrats withdrew their candidates and Hamilton became one of the more notable of the Conservative casualties in the 1997 General Election.

7. The Libel trial

In 1998 Neil Hamilton made the fateful decision to sue Mohamed Al-Fayed for libel on the basis of the comments he had made on the edition of Dispatches broadcast of 21 January 1997. But despite the trial judge's rather jaundiced view of Al-Fayed's testimony, Hamilton lost the case and was thus faced with the prospect of having to pay both his own and Al-Fayed's legal costs.

Hamilton later subsequently the decision when it became known that Al-Fayed had bought papers stolen from Hamilton’s lawyers by the infamous Benny the Binman, which outlined their cross-examination plans. Unfortunately for Hamilton the Court of Appeal dismissed his appeal in late 2000, on the grounds that Fayed's acquisition of the stolen papers would not have materially affected the outcome of the trial. Now faced with the payment of some £2m in legal costs which he could not pay, Hamilton declared bankruptcy.

Since that time he has, together with his rather formidable wife Christine Hamilton, been forced to descend to the level of becoming a celebrity in an endeavour to make a living.

8. Conclusions

One of the problems of this whole affair is that much of the 'evidence for the prosecution' is based on the testimony of one Mohamed Al-Fayed, who has a considerable track record of being economical with the truth. The opinions of the DTI inspectors on Mr Fayed's character have already been noted, whilst the judge at the libel trial saw fit to describe his evidence as "inconsistent and unreliable" and suggested that his "obsessional attitude and beliefs have distorted his perception of the truth". Over the years Al-Fayed has given various versions of events which differ in terms of how payments were made and the amounts that were paid, which makes it particularly difficult to establish the precise truth of what did happen. Indeed it has now been established that almost every allegation made in the original Guardian article has now been shown to have been false, in particular the central allegation that IGA had funelled cash to MPs has been accepted as untrue. (Whatever cash payments were made, were made by Al-Fayed himself, without IGA's knowledge.)

Although the name of Neil Hamilton has become inextricably linked to the whole scandal, the strange thing is that he wasn't even that prominent amongst the MPs who participated in the original lobbying campaign. He later become a target simply because he was a government minister at the time that Al-Fayed decided to go public, and continued to be a target thereafter because he continued to insist on his innocence. In contrast, Tim Smith, who simply confessed and resigned, rather slipped away from everyone's attention.

Neil Hamilton has always denied that he received any cash payments, although he did admit that he had stayed as a guest of Al-Fayed at the Ritz Hotel in Paris, as well as spending two nights in a flat on his estate in Scotland and receiving a number of unsolicited gifts from Harrods. He openly admitted that he had made no entries in the register of Members' Interests in respect of these items, claiming in his defence that he was under no obligation to do so under the rules as they stood at that time. All this might well be true, but rather missed the point. Ian Greer was later to write of the "shamelessness in the actions of many MPs" as if even he was surprised at the sheer venality of the elected representatives of the people grubbing around for freebies and hand outs. It was more the general impression of sleaze, rather than any specific allegation that did for Hamilton and it seems likely that Hamilton lost his libel cause not so much because the jury thought he had taken cash from Al-Fayed, but more cause they believed that he was so tainted it didn't matter whether he had or not.

The sad truth is that very few people came out of the affair with their reputations unsullied as even The Guardian stands guilty of publishing a load of unsubstantiated nonsense and allowing itself to become the mouthpiece for some of Al-Fayed's wildest fantasies. It almost goes without saying, that none of the above would ever have entered the public domain had the government issued Al-Fayed a British passport.

Of course the whole Cash for Questions scandal did untold damage to the reputation of John Major's Conservative administration, which thereafter became inextricably linked in the public mind with the concepts of sleaze and corruption and was one of the major factors behind the comprehensive defeat of the Conservative Party at the General Election of 1997.